AOL's AIM iPhone App Is Getting Awesome, Disruptive To AT&T

While our government scratches its chin over the evils of overpriced cellphone text messaging, technology is fighting the battle faster.

Specifically, Apple's new "push notifications" system -- and others like it -- could start the disruption process that could force wireless carriers to price text messages far cheaper than they are today.

AOL's new AIM app for the iPhone -- available now in free, ad-supported, and $2.99, no-ad flavors -- is the start. It's the first major IM app for the iPhone's new 3.0 software that includes push notifications.

What does that mean? It means that when you receive an IM, no matter what you're doing, the iPhone pops up an alert message and a cue to open the AIM app to reply. Just the way text messages show up on the iPhone.

In our brief tests last night and this morning, it's not quite there yet -- but it's getting close. AIM's alerts work most of the time, instantly alerting you to a new message. But at one point, they stopped working with no warning, and didn't start working again until we cycled push notifications off and on in the iPhone's settings section.

No big deal. We assume these are kinks that will work themselves out, and soon, iPhone users will be able to get instant messages as quickly and reliably as text messages, all the time. (And because push notifications use the iPhone's data signal -- including wi-fi -- they can even work where AT&T's cell signal does not. Such as in my Brooklyn garden apartment.)

Again, this is just the beginning. We expect IM software companies like Meebo or eBuddy to release IM apps with push notifications that connect to all major services, including AIM, Google chat, Facebook chat, Yahoo and MSN Messenger, etc., within weeks. Someone will eventually release Twitter apps that send you push notifications for direct messages or @replies. And so forth.

What does this mean for AT&T and other carriers? Not much yet, because most people will still probably stick with the text messaging plan they're paying for today. But it could eventually mean cheaper text messages for everyone.

I can assure you that the day I get the people who SMS me the most -- most of whom have iPhones -- sending me IMs instead of texts, I'll drop down to the $5/month, 200 text message plan, from the $15/month, 1500 text message plan I'm on today. That's a $10 reduction -- 12% -- in my monthly AT&T bill (before taxes and fees).

That adds up: $120 a year I'll be saving, thanks to Apple, or $240 spread over the life of my contract. And because that's very high-margin revenue, I will be a less lucrative subscriber to AT&T. (For U.S. carriers, data revenue -- driven by text messaging -- is 20% to 25% of their revenue, and much of their growth.)

So how can they keep me spending all that money? They can't. One last-ditch effort is to include multimedia messaging -- photos and videos -- in their plans. But those sorts of things are just as easily posted to Twitpic and YouTube and linked to in an email, tweet, or IM. That won't be enough for me.

In the long run, as the SMS and MMS message formats lose their exclusivity, carriers will have to eventually offer them for less.

How? They could cut the costs for single-use messages -- currently a laughable ripoff at more than 20 cents per message sent/received. Or they could offer more messages as part of their monthly buckets -- making each message cheaper. Or they could at least offer more subscription options. For example, it's annoying that AT&T doesn't offer a messaging plan between $5 and $15 a month. Now they might have to.

The biggest challenge now is getting push notifications rolled out on enough smartphone platforms and apps, so it's more useful outside of packs of iPhone users. BlackBerry maker RIM is starting, Google could easily, etc. Then we'll need to make sure carriers don't disable or disturb them out of competitive nervousness. (So far, there's no precedent for "net neutrality" on mobile networks -- telcos can pretty much block stuff at will. If a carrier blocked or delayed smartphone platform-based push notifications, that could be the start.)

In summary, the idea isn't to completely replace text messaging overnight -- that won't happen. But if it can replace some text messaging for most people -- and most text messaging for some people -- it could truly be disruptive.